The stock market has been jittery over the past week or so, and investors aren't likely to get the answers they're hoping for on Wednesday. Much of the uncertainty in the market stems from the upcoming Federal Reserve symposium in Jackson Hole, Wyoming, and until Fed Chair Jerome Powell and his colleagues give their views there, investors will be left to speculate about what the future could bring. Nevertheless, Wall Street was in a somewhat bullish mood on Wednesday morning, and as of 8:15 a.m. ET, futures on the Nasdaq Composite (^IXIC -0.28%) had gained 27 points to 12,924.
A couple of Nasdaq-listed companies weighed in with their latest financial reports overnight, and shareholders got their first chance to react in the premarket session Wednesday morning. Shares of II-VI (COHR -2.66%) moved higher as the photonics specialist gave investors solid results, but shareholders in Petco Health and Wellness (WOOF 2.41%) weren't as fortunate. Read more about the details below.
II-VI lights up
Shares of II-VI rose between 5% and 6% in premarket trading on Wednesday morning. The laser specialist reported fiscal fourth-quarter results for the period ended June 30 that were encouraging, pointing toward greater success down the road.
Revenue for II-VI came in at $887 million, which was up 10% year over year and exceeded the guidance the company had provided earlier. Net income of $134 million on an adjusted basis showed similar gains, and the resulting $0.98 per share in adjusted earnings exceeded expectations.
CEO Chuck Mattera noted that II-VI's strong performance throughout the fiscal year got even better in the fourth quarter, as deep customer relationships helped provide lasting demand for the company's products. At the same time, II-VI continued to invest in technology, and the laser specialist's vertically integrated operational structure helped it contain costs and avoid some of the supply chain challenges that rival companies have faced.
II-VI is changing its name to Coherent, which it acquired at the beginning of July. However, Mattera will stay on as CEO, and the combined company sees good times ahead. With projections for sales of $1.3 billion to $1.4 billion and earnings of $0.77 to $0.90 per share for the first quarter of fiscal 2023, II-VI expects to keep its momentum up in the year to come.
All bark, no bite?
On the downside, Petco Health fell nearly 7% in premarket trading. The pet products retailer reported second-quarter financial results that were mixed, leaving shareholders with some concerns about the company's future direction.
Petco managed to see its top line move higher, but cost pressures weighed on profits. Revenue of $1.48 billion was up 3.2% compared to the prior-year period, with comparable sales climbing 3.8% to mark the 15th consecutive quarter of growth. However, adjusted net income of $49.7 million was down more than 25% year over year, resulting in disappointing adjusted earnings of $0.19 per share.
Moreover, Petco sees challenges continuing for the rest of the fiscal year. The company cut its guidance, with sales now projected to be between $5.975 billion and $6.05 billion. That's down between $175 million and $200 million from the previous range Petco had given. In addition, a $50 million reduction in projected pre-tax operating earnings led to a roughly $0.20-per-share cut to earnings guidance, with Petco now expecting $0.77 to $0.81 per share for 2022.
Petco's business is somewhat resilient amid challenging economic conditions, because pet owners have only so much flexibility in cutting back on the needs of their animals. Nevertheless, the pressure on Petco's bottom line shows that the company isn't completely invulnerable to a changing economy, and that could weigh on share prices in the future.